Purpose of the Bill

The primary purpose of the Animal Health Australia and Plant Health Australia Funding Legislation Amendment Bill 2022 (the Bill) is to amend the Australian Animal Health Council (Live-stock Industries) Funding Act 1996 (AHA Act) and the Plant Health Australia (Plant Industries) Funding Act 2002 (PHA Act) so as to:

• insert provisions that enhance efficiency and better facilitate future levy arrangements, as well as improving consistency between the Acts ‘regarding the spending of emergency response levies’[1]
• repeal redundant provisions.

Proposed amendments in the Bill relating to the AHA Act include:

• amending the AHA Act to facilitate the funding of emergency responses under emergency biosecurity response deeds other than the Emergency Animal Disease Response Agreement (EADR Agreement)[2]
• empowering the Governor-General to make Regulations, which is consistent with the regulation making power under the PHA Act.

Proposed amendments in the Bill relating to the PHA Act include:

• expanding the scope of permissible uses for Emergency Plant Pest Response (EPPR) levies in the PHA Act to include the promotion or maintenance of the health of an EPPR plant, so as to provide PHA industry members with greater flexibility in meeting industry biosecurity needs. This is consistent with permissible uses for the equivalent Emergency Animal Disease Response (EADR) levies under the AHA Act
• empowering the Secretary of the Department of Agriculture, Fisheries and Forestry (DAFF), or a delegate of the Secretary, to determine that a body is a ‘relevant Plant Industry Member’ by notifiable instrument.

The Bill also makes minor amendments to the Horticulture Marketing and Research and Development Services Act 2000 and the Primary Industries Research and Development Act 1989, as a consequence of particular amendments made to the PHA Act.

History of the Bill

The Bill largely replicates the Animal Health Australia and Plant Health Australia Funding Legislation Amendment Bill 2021 (the 2021 Bill), which was introduced by the previous Government in November 2021. The 2021 Bill passed the House of Representatives without amendment but was not considered by the Senate before the dissolution of the 46th Parliament.

The Bill has a different commencement date, and a change to the wording of an application provision, but is otherwise identical to the lapsed Bill.

A Bills Digest was prepared for the lapsed Bill and has been used as the basis for this Digest.[3]

Background

Levies and the levy system

For a number of years, ‘Australian primary industries (agriculture, fisheries and forestry producers and their representatives) have asked the [Federal] Government to impose levies and charges on their products—using its taxation power under the Constitution—to facilitate industry investment in strategic activities’.[4]

Levies and charges are taxes imposed on producers and are initiated by the relevant primary industry body to fund and allow for key strategic industry issues to be addressed, and activities to be undertaken by pooling industry resources. These activities are usually beyond the scope of small, scattered rural enterprises to put in place on their own. The need for a levy is usually identified by a peak industry body in response to a problem or an opportunity that needs collective industry funding to address effectively. Levies are taxes imposed on domestic rural commodities and products while charges are taxes on imports and exports. Unlike other taxes, these levy funds are directed to levy recipient bodies to invest in the strategic activities they were imposed to fund.[5]

According to the Department ‘Primary industries drive all aspects of their levy—whether they need one, how it will be charged and collected, what the rate is, and when to review the levy.’[6]

Types of levies and charges

‘There are five purposes for which agricultural levies are established’ and the ‘levies must be used for the purpose for which they were collected.’[7] In Australia, the agricultural levy system provides significant funding for research and development, marketing, biosecurity and residue survey[8] function for the benefit of Australian agriculture and the greater society.

Levy recipient bodies (intermediaries):[9]

• are responsible for managing and investing levies in line with industry priorities
• receive and invest the matching funding that government provides for eligible research and development activities up to set limits.[10]

There are 18 levy recipient bodies, including five statutory research and development corporations (RDCs), 10 industry-owned RDCs, Animal Health Australia (AHA) and Plant Health Australia (PHA), and the National Residue Survey (NRS).[11]

Biosecurity may be thought of as a panoply of policy responses to the risks posed by disease, pests and other threats to plant, animal and human health. The elements involved in the biosecurity policy response depend on the nature of the biosecurity hazard, however common elements include preparedness, prevention, management through containment and surveillance, post incursion responses (for example, eradication and containment of outbreaks) and adaptation.[12]

It is generally recognised that there are benefits to be gained in placing emphasis on upstream biosecurity activities such as preparedness, prevention and containment, and reduce reliance on—and costs associated with—response measures. The use of cost recovery mechanisms through levies and charges create incentives for behaviours that preference such upstream activities by signalling the ‘price’. A cost recovery mechanism for funding ‘intervention readiness’ exists through the PHA and AHA, as well as for industry biosecurity plans and other upstream activities developed by these bodies.

The Second Reading Speech explains that:

Four kinds of biosecurity levies provide an equitable way for all producers to contribute to the cost of the biosecurity activities and eradication responses that benefit their industry.[13]

Biosecurity activity levies:

Are collected to fund industry member contributions to Plant Health Australia (PHA) and Animal Health Australia (AHA).

AHA and PHA facilitate a national approach to enhancing Australia’s animal and plant health status, through government and industry partnerships for pest and disease preparedness, prevention, emergency response and management.[14]

Biosecurity emergency response levies:

• are collected to repay to the Australian Government, over a period of time, an industry’s share of the costs of a response to a pest or disease incursion under the Emergency Plant Pest Response Deed (EPPRD) and the Emergency Animal Disease Response Agreement (EADRA), where the government has underwritten the industry’s contribution in the first instance.

• are often set at nil, and only activated if an emergency response is required. Alternatively, they can be set at a low rate to raise funds pre-emptively for use during an emergency response.

…

New emergency response agreements developed to cover pest and disease incursions not currently covered by existing agreements will include similar provisions to the EPPRD and EADRA to enable the use of biosecurity emergency response levies to repay the costs of emergency responses.[15]

Since 2005, PHA has been the custodian of the EPPRD, a formal, legally binding cost sharing agreement between PHA, the Australian Government, all state and territory governments and plant industry signatories, covering the management and funding of responses to Emergency Plant Pest incidents.[16]

The Deed binds industries and governments to a formal incursion response, sharing the responsibility and costs, based on a pre-agreed assessment of the relative private and public benefits of eradication.[17]

The EADR Agreement commenced in 2002. It sets out the roles and responsibilities/activities of the affected Parties (government and industry signatories) providing certainty in funding for emergency animal disease threats to Australia and provides for rapid and effective responses aimed at containment and eradication. Currently, the Parties include the Australian Government, the state and territory governments and a broad range of peak national animal industry parties representing the major livestock industries including cattle, dairy, sheep meat, wool, poultry, pork and lot feeders.

PHA and the PHA Act

PHA was established in 2000 as an independent not-for-profit public company, to service its members and is the national coordinator of the government-industry partnership for plant biosecurity in Australia (which includes honey bees) tasked to minimise plant pest impacts on Australia, enhance market access and contribute to industry and community sustainability.[18] PHA provides expert technical advice on biosecurity issues, assistance in the event of an incursion, development of biosecurity plans and strategies, as well as independent advice on biosecurity investment.

The PHA Act is the disbursement Act under which the Commonwealth pays levies and charges that are collected from certain plant industries to PHA. The Act also sets out the priorities which must be used to inform spending of the EPPR levies. The Explanatory Memorandum states:

These priorities ensure that the Commonwealth’s primary purposes for the spending of EPPR levies are met. These purposes include cost recovery for collection of these levies and funding industry contributions to relevant emergency responses under the Emergency Plant Pest Response Deed (EPPRD).[19]

AHA and the AHA Act

Animal Health Australia Council Limited, also known as Animal Health Australia (AHA) is an independent not-for-profit public company established in 1996 by the Australian, state and territory governments and national livestock industries.[20] It is the national coordinator brokering arrangements for government and industry partnerships and collaborations to strengthen and evolve animal health and biosecurity in Australia. Its ‘members include the Australian Government, state and territory government, the peak national councils of Australia’s livestock industries and various key research, veterinary and educational organisations.’[21]

AHA acts as the conduit for distributing levies and charges collected by the Commonwealth from certain animal industries, pursuant to the AHA Act for animal health related activities.[22] Similar to the PHA Act, the AHA Act sets priorities that must be used to inform spending of EADR Agreement levies.

The Explanatory Memorandum states:

These priorities ensure that the Commonwealth’s primary purposes for EADR levies are met. These purposes include cost recovery for collection of these levies and funding industry contributions to relevant emergency responses under the Emergency Animal Disease Response Agreement (EADRA).[23]

Committee consideration

Senate Standing Committee for the Scrutiny of Bills

The Scrutiny of Bills Committee has not reported on the Bill at the time of writing. The Scrutiny Committee reported on the 2021 Bill, seeking further information on items 9 and 10 of the 2021 Bill, which remain unchanged in the current Bill. As the Scrutiny Committee explained:

Items 9 and 10 of Schedule 1 to the bill seek to amend the definition of relevant Plant Industry Member within the Plant Health Australia (Plant Industries) Funding Act 2002 (the Act). Currently, section 3 of the Act defines relevant Plant Industry Member as meaning, for a plant product, a designated body for the plant product under either clause 13 of Schedule 27 to the Primary Industries (Excise) Levies Act 1999 or clause 12 of Schedule 14 to the Primary Industries (Customs) Charges Act 1999. This has the effect of providing that a designated body is declared by the minister by legislative instrument. By contrast, the new definition of relevant Plant Industry Member inserted by the bill provides that a relevant Plant Industry Member is determined by the Secretary, or their delegate, by notifiable instrument.[24]

The Scrutiny Committee sought the former Minister’s advice as to why it was:

considered necessary and appropriate to amend the [PHA Act] to provide that relevant Plant Industry Members will no longer be declared by legislative instrument, noting that such declarations would therefore no longer be subject to parliamentary scrutiny.[25]

The former Minister advised the Scrutiny Committee:

At present the Primary Industries legislation is unnecessarily linked to the PHA Act through the combined use of the designated bodies declarations made under the Primary Industries legislation. The primary purpose of the designated bodies declarations is to ensure the Minister must consider a designated body's representations prior to making recommendations to the Governor-General regarding regulations that effect levy changes that will apply to specified plant products.

In its current form, the PHA Act uses the designated bodies declarations as a means of identifying which Plant Industry Member represents a plant product on which a levy or charge is imposed. This can create a situation where a designated body declaration under the Primary Industry legislation is amended solely for purposes under the PHA Act. The purpose of these amendments is to simply delink this process and provide for a process within the PHA Act itself.

To become a Plant Health Australia member, an applicant body would be required to demonstrate that it represents the plant products ("crops") identified in its application. If the applicant body was successful, its representation of the plant product would be noted in the formal record and the Secretary of the department would make an instrument under the PHA Act determining it to be a relevant Plant Industry Member.

I note the changes would not impact in any way the ability of an industry body to seek designated body status for other levy-related purpose under the Primary Industries legislation. For additional clarity, I note these amendments do not impact on the nature or rate of levies or charges being applied.[26]

The Scrutiny Committee thanked the former Minister for this response and asked for the key information provided by the Minister to be tabled as an addendum to the Explanatory Memorandum for the Bill.[27] While an addendum to the Explanatory Memorandum to the 2021 was not published, the Explanatory Memorandum to the current Bill includes the information at pages 8 to 9.[28]

Policy position of non-government parties/independents

Non-government parties and independents do not appear to have commented publicly on the Bill to date. As set out above, the Bill replicates a Bill introduced by the former Coalition Government.[29] The Labor Opposition supported the 2021 Bill.[30]

There were no comments on the 2021 Bill from other parties or independents.

Position of major interest groups

According to the Explanatory Memorandum of the Bill:

Consultation has been undertaken with PHA [Plant Health Australia], all PHA industry members and AHA [Animal Health Australia] (noting that the proposed changes would not impact AHA's existing industry members). A four-week period for submissions ended on 8 October 2021 and eleven submissions were received. All submissions were supportive of the proposed amendments.[31]

At the time of writing, the submissions were not publicly available.

Financial implications

The Explanatory Memorandum to the Bill states that it ‘would have no financial impact on the Australian Government Budget’.[32]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[33]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights (PJCHR) has not yet considered the Bill. The PJCHR had no comment on the 2021 Bill.[34]

Key issues and provisions

Australian Animal Health Council (Live-stock Industries) Funding Act 1996

Subsections 4(1), 4(2) and 4(2A) of the AHA Act provide for Commonwealth payments to the Australian Animal Health Council, otherwise known as Animal Health Australia (AHA), of amounts equal to the relevant animal health levies and charges collected (other than the horse disease response levy) and the conditions of those Commonwealth payments.

Subsection 4(3) of the AHA Act requires that any payment by the Commonwealth made under subsection 4(2) to AHA, is subject to the condition that AHA apply the Commonwealth payment in accordance with the priorities in subsections 4(3A) to 4(6) and subject to terms of subsections 4(7) and (8) of the AHA Act.

Subsection 4(5) of the AHA Act currently stipulates that the third priority is to apply the Commonwealth payment in making, on behalf of the non-government body that is a party to the Emergency Animal Disease Response Agreement (EADR Agreement) and is concerned with the production of the animal product, a payment to the Commonwealth for the purpose of discharging a liability of the body to the Commonwealth that arises under the EADR Agreement (paragraph 4(5)(a)). Alternatively, if the animal product is honey, the payment may be made to the Commonwealth or Plant Health Australia Limited (PHA) for the purpose of discharging a liability of the body to the Commonwealth relating to the Commonwealth’s costs connected with a plant disease that is, may be or may have been spread by honey bees (paragraph 4(5)(b)).

Making provision for an emergency biosecurity response deed

Item 2 repeals and replaces subsection 4(5) to replace the specific reference to the EADR Agreement with a reference to an emergency biosecurity response deed, which will be defined by Item 1 to mean:

(a) the EADR agreement, or

(b) a deed

  i. that both relates to an emergency biosecurity response and

  ii. that is prescribed by the Regulations (see item 3).

Proposed subsection 4(5) will provide that the third priority is to apply the Commonwealth payment in making, on behalf of a non-government body that is a party to an emergency biosecurity response deed and is concerned with the production of the animal product, a payment to the Commonwealth for the purpose of discharging a liability of the body to the Commonwealth that arises under that deed.

The Explanatory Memorandum states that this amendment provides for flexibility in relation to:

[F]uture levy arrangements for industry signatories by allowing funding to be applied in making a payment to the Commonwealth in relation to a deed other than the EADRA that relates to an emergency biosecurity response and is prescribed by the Regulations. For example, a new response deed, the Aquatic Deed, is currently being developed for exotic aquatic animal diseases. It is intended that this proposed deed, if signed, would be so prescribed.[35]

The repeal of existing subsection 4(5) also has the effect of removing the reference to honey in existing paragraph 4(5)(b) of the AHA Act because it is redundant. This is because as a practical matter ‘responses affecting, or affected by, honey bees are plant-related due to many crops relying on bees for pollination’.[36] The Australian Honey Bee Industry Council (AHBIC) joined PHA in 2002, and since 2002, ‘the AHA Act has allowed AHA to pay Plant Health Australia (PHA) on behalf of an AHA industry member for purposes relating to emergency responses involving honey bees.’[37]

[I]n 2015, AHBIC ceased its AHA membership. The EADR levy on honey was also ceased, PHA/EPPR levies on honey were introduced and any remaining honey industry reserves were transferred over to PHA.[38]

Item 3 will insert proposed section 8 into the AHA Act, which empowers the Governor-General to make Regulations prescribing matters required or permitted by the Act to be prescribed by the Regulations, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. This amendment would enable a deed to be prescribed for subparagraph (b)(ii) of the definition of emergency biosecurity response deed proposed by item 1 of this Bill.

The Explanatory Memorandum states this amendment would ‘support the effective administration of the AHA Act, as it would provide a discretionary power for the Governor-General to make other Regulations, where appropriate.’[39] It also points out that the PHA Act similarly ‘provides a discretionary power for the Governor-General to make Regulations.’[40]

Plant Health Australia (Plant Industries) Funding Act 2002

Item 10 inserts a new definition of relevant Plant Industry Member in proposed section 3A of the PHA Act, to mean a body determined in an instrument under proposed subsection 3A(2) in relation to that EPPR plant product. An EPPR plant product is one on which EPPR levy or charge has been imposed.[41] An ‘EPPR levy’ is imposed under Schedule 27 to the Primary Industries (Excise) Levies Act 1999 and an ‘EPPR charge’ is imposed under Schedule 14 to the Primary Industries (Customs) Charges Act 1999.

The Explanatory Memorandum states the PHA Act currently makes use of

designated bodies declarations as a means of identifying which Plant Industry Member represents a plant product on which a levy or charge is imposed. This can create a situation where a designated body declaration under the Primary Industries legislation is amended solely for purposes under the PHA Act. The purpose of these amendments is to simply delink this process and provide for a process within the PHA Act itself.

To become a PHA member, an applicant body would be required to demonstrate that it represents the plant products ("crops") identified in its application. If the applicant body was successful, its representation of the plant product would be noted in the formal record and the Secretary of the Department would make an instrument under the PHA Act determining it to be a relevant Plant Industry Member.[42]

Proposed subsection 3A(2) provides that the Secretary of the Department may, by notifiable instrument, determine one or more bodies in relation to one or more specified EPPR plant products. The Explanatory Memorandum justifies giving this discretionary power to the Secretary to make such determinations by notifiable instrument, having regard to their role and responsibilities and stating that ‘this would be an administrative process to confirm that a body represents the industry for that EPPR plant product in the body’s role as a Plant Industry Member.’[43] This would also effectively and efficiently enable ‘those affected by these determinations to access an authoritative form of the instrument on the Federal Register of Legislation.’[44]

However, proposed subsection 3A(3) provides that the Secretary of the Department must not determine a body in relation to an EPPR plant product unless:

1. the body is a Plant Industry Member and
2. the Secretary is satisfied that the body represents the industry for that EPPR plant product in the body’s role as a Plant Industry Member.

Funding

Item 12 substitutes an amended section 4 which would, according to the Explanatory Memorandum to the Bill:

… provide that the Commonwealth is to pay to PHA an amount that is equal to the total PHA levy or charge receipts from each PHA plant product for a PHA year. Section 4 would also provide for the Commonwealth to pay to PHA an amount equal to the total PHA penalty receipts from each PHA plant product for a PHA year.[45]

Currently, section 4 of the PHA Act provides for payment of PHA levies on plant products that attract a primary levy or charge, and section 5 provides for funding to PHA if there is no primary levy or charge on a PHA plant product.

Item 14 repeals section 7 of the PHA Act, and consequent items, to remove the arrangement for excess levies or charges to be redirected to the industry’s prescribed Research and Development Corporations. The Explanatory Memorandum to the Bill states that repealing section 7 of the PHA Act would remove the administrative burden associated with its operation.[46]

Funding for emergency plant pest responses

Section 10C of the PHA Act sets out the order of priority for payments out of EPPR funds, which are currently:

• first priority: administrative and other costs
• second priority: meeting liabilities under EPPR Deed for the plant product
• third priority: meeting liabilities under EPPR Deed for other plant products
• fourth priority: other emergency plant pest response purposes.

Items 24 and 25 amend the second and third priorities such that instead of references to payments to the Commonwealth, on behalf of ‘the relevant Plant Industry Member’, references are to ‘a relevant Plant Industry Member […]’. This is designed to accommodate circumstances where more than one body represents a particular plant product as a Plant Industry Member.

Item 26 proposes a new subsection 10(6) with a revised fourth priority that replaces ‘other emergency plant pest response purposes’ with promotion or maintenance of plant health.

The Explanatory Memorandum states that this proposed amendment would allow for a broadening of the range of permissible uses of EPPR levies.[47]